Commission of Contracts of General Executive Committee of Petroleum Workers Union of Republic of Mexico v. Arriba Ltd.

Decision Date25 August 1994
Docket NumberNo. 01-93-00236-CV,01-93-00236-CV
Citation882 S.W.2d 576
PartiesThe COMMISSION OF CONTRACTS OF THE GENERAL EXECUTIVE COMMITTEE OF THE PETROLEUM WORKERS UNION OF THE REPUBLIC OF MEXICO, and the Petroleum Workers Union of the Republic of Mexico, Appellants, v. ARRIBA, LIMITED, Appellee. (1st Dist.)
CourtTexas Court of Appeals

Bertrand C. Moser, Carlos A. Ryerson, Houston, for appellant.

Mike O'Brien, John M. O'Quinn, Houston, for appellees.

Before O'CONNOR, WILSON and HEDGES, JJ.

OPINION

O'CONNOR, Justice.

The issue in this case is the propriety of the service on foreign citizens. This is an appeal from a bill of review action challenging a default judgment, which with interest, now amounts to about $500,000,000. We reverse and remand for a new trial.

The appellants here (the plaintiffs in the bill of review below) are: the Commission of Contracts of the General Executive Committee of the Petroleum Workers Union of the Republic of Mexico, and the Petroleum Workers Union of the Republic of Mexico. The Petroleum Workers Union of the Republic of Mexico (the Union) is an association that represents the workers of Pemex, the Mexican national oil company. The association that represents the workers of Pemex, the Mexican national oil company. The Commission of Contracts of the General Executive Committee of the Petroleum Workers Union of the Republic of Mexico (the Commission) is a Mexican civil society of Union members operating as a construction company, which was authorized during the relevant time period to enter into commercial contracts on behalf of the Union. The appellee (the defendant in the bill of review), is Arriba, Ltd., a Bahamian corporation whose sole stockholders are David Black and Bill Flanigan.

On October 1, 1984, Arriba and the Commission signed a contract for the sale and purchase of six million barrels of residual oil. On June 14, 1985, Arriba filed suit in Harris County against the Union, the Commission, and four individuals, alleging that the appellees had breached the 1984 contract. The Union and the Commission were served with citation under the Texas Long-Arm Jurisdiction Statute, TEX.CIV.PRAC. & REM.CODE §§ 17.041-17.045 (Vernon 1986). None of the appellees filed an answer, and on April 23, 1986, the trial court signed a default judgment against all appellees. The 1986 judgment against the Union and the Commission was for $92,000,000.

On October 17, 1987, Arriba released the 1986 judgment as part of a settlement. The release was conditioned on a joint venture agreement entered into between Arriba and Comater, S. DE R.L., who was acting as the agent for the Union, the Commission, and Pemex. 1

On February 22, 1989, Arriba filed suit in Harris County against the Union, the Commission, and four individuals. 2 Arriba alleged that the Union and the Commission breached the 1987 joint venture agreement and that the 1986 judgment had been released without consideration or for consideration that had failed. Arriba sued for breach of contract and for cancelation of the release of the 1986 judgment.

Arriba served the Union and the Commission with citation through the Secretary of State under the long-arm statute. On February 22, 1989, the Harris County District Clerk issued citations for the Union and the Commission. On February 23, 1989, a deputy from the Travis County Sheriff's Department served the Secretary of State's office with citations for the Union and the Commission. On March 2, 1989, Arriba filed the returns served by Travis County Sheriff's Department with the Harris County District Clerk. On April 4, 1989, Arriba filed two certificates from the Secretary of State that stated the Secretary of State had forwarded copies of the citations and petitions to the Union and the Commission.

On April 4, 1989, 41 days after filing the suit, the court granted Arriba a default judgment. The 1989 default judgment set aside the release of the 1986 judgment, reinstated the 1986 default judgment, and awarded Arriba the following additional amounts: (1) $750,000 for special and incidental damages, (2) $30,000,000 in attorney's fees, and (3) $150,000,000 in punitive damages. Arriba had no pleadings for punitive damages or attorney's fees in its 1989 petition.

On November 1, 1990, the appellants filed a petition for bill of review to set aside the 1989 default judgment. The petition alleged that service on both the Union and the Commission was improper, and that they did not have notice of the 1989 lawsuit before the default judgment was rendered. On October 20, 1992, the trial court held a nonjury trial on the bill of review. On December 10, 1992, the trial court denied the bill of review and held that the 1989 default judgment remained valid and final.

The Bill of Review

A bill of review is one of the authorized procedures for making a direct attack on a default judgment. McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706, 709 (1961). A bill of review is a method of vacating a default judgment in which the default judgment is asserted to be void for want of valid service of process, whether or not the invalidity is disclosed by the papers on file in the case. Id. 345 S.W.2d at 710. To be successful on a bill of review, the bill of review plaintiff must allege and prove (1) a meritorious defense to the cause of action alleged to support the judgment, (2) which it was prevented from making by the fraud, accident, or wrongful act of the opposite party, (3) unmixed with any fault or negligence of its own. Baker v. Goldsmith, 582 S.W.2d 404, 406-07 (Tex.1979).

When a party claims that the judgment is void for lack of proper service, which denied the party due process, it is not necessary for the party to prove a meritorious defense. Peralta v. Heights Med. Ctr., 485 U.S. 80, 86, 108 S.Ct. 896, 900, 99 L.Ed.2d 75 (1988) (bill of review based on void service); see also Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex.1988) (motion for new trial); LBL Oil Co. v. International Power Serv., Inc., 777 S.W.2d 390, 390-91 (Tex.1989) (appeal by writ of error). If the Union and the Commission were not properly served, they were not required to raise a meritorious defense in the trial by bill of review. Peralta, 485 U.S. at 87, 108 S.Ct. at 900.

A. Necessity for Writ of Error

In point of error three, the Union and the Commission complain that the trial court erred in finding that they should have filed a writ of error to attack the default judgment and were precluded from filing their bill of review.

A bill of review is an independent action of an equitable nature brought by a party to the former action and seeking to set aside a judgment that is no longer appealable or subject to a motion for new trial. Tice v. City of Pasadena, 767 S.W.2d 700, 702 (Tex.1989). A bill of review is designed to prevent manifest injustice. French v. Brown, 424 S.W.2d 893, 895 (Tex.1967); Hesser v. Hesser, 842 S.W.2d 759, 765 (Tex.App.--Houston [1st Dist.] 1992, writ denied). Relief by bill of review is available only if a party has exercised due diligence to pursue all adequate legal remedies against a former judgment, and through no fault of its own, no adequate legal remedy was available. Tice, 767 S.W.2d at 702; Hesser, 842 S.W.2d at 765.

To be entitled to challenge the default judgment by bill of review, the Union and the Commission must show a good excuse for failure to exhaust adequate legal remedies. Hesser, 842 S.W.2d at 765. If legal remedies were available but ignored, the equitable remedy of a bill of review will not later intervene. Id.

The appellants complain of the following findings of fact:

35. Ruben Choreno Morales testified during the trial that he first learned, and therefore the Commission and Union first learned of the April 4, 1989 judgment on September 29, 1989.

36. Alfonso Alonzo testified that he was an attorney retained by the United Mexican States Consul of San Antonio, Texas to represent the Petroleum Workers Union of the Republic of Mexico and that he was directed by Ruben Choreno Morales, upon Mr. Choreno's learning of the April 4, 1989 judgment, to do nothing on behalf of the Union and the Commission. 3

The appellants also complain of the following conclusions of law:

17. The Union and the Commission knew of the April 4, 1989 Default judgment.

18. The Union and the Commission had sufficient notice of the April 4, 1989 Default Judgment prior to the expiration of the time for filing a writ of error and prior to the filing of this Bill of Review proceeding.

19. On September 29, 1989, this day being within the six month time period within which the Union and the Commission were required to file a writ of error attacking the Default Judgment of April 4, 1989. The Union's and the Commission's failure to file the writ of error is negligence as a matter of law.

29. The Union and the Commission knew of the April 4, 1989 Default Judgment within the time period sufficient to file a writ of error. Therefore, the Bill of Review filed by the Union and the Commission is improper and is denied.

Findings of fact in a case tried to the court have the same weight as a jury's answers to questions in the charge. Stern v. Wonzer, 846 S.W.2d 939, 942 (Tex.App.--Houston [1st Dist.] 1993, no writ). Findings are not conclusive when a complete statement of facts appears in the record. Pontiac v. Elliott, 775 S.W.2d 395, 399 (Tex.App.--Houston [1st Dist.] 1989, writ denied). Findings are binding on this Court only if supported by evidence of probative force. Id. The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence to support them. Stern, 846 S.W.2d at 942. The same standards apply in reviewing the legal or factual sufficiency of the evidence supporting a jury's answer to a jury question. Id. We consider the appellants' challenge to be one of the sufficiency of the evidence to support the fact findings of which they complain. In reviewing the legal sufficiency of the...

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